Judge Halts Defendants' Bid to Avoid $116M Med-Mal Verdict

ed. note: thanks to Gloria Norton of the DuPage County Bar Association for this piece

By Rebecca Riddick
Daily Business Review
10-06-2006

Even before a jury had completed its deliberations, two Tampa, Fla.-area medical practices filed for bankruptcy after they were hit with a $116.7 million malpractice verdict in favor of a quadriplegic who blamed them for his condition.

The Chapter 7 bankruptcy filings -- designed to avoid paying what attorneys called the largest medical malpractice award in state history -- temporarily halted the trial. But U.S. Bankruptcy Judge Paul Glenn took the unusual action of setting aside the defendants' petitions so the Hillsborough, Fla., circuit court jury could finish its work.

After the jurors reconvened Tuesday afternoon, they deliberated for three hours and returned a $100.1 million punitive damages verdict.

On Sept. 29, the Tampa jury reached a compensatory verdict that awarded 50-year-old Tampa resident Allan Navarro a total of $15.6 million for past and future medical bills, $616,000 for lost wages in the past and future, and $46.5 million for past and future pain and suffering. His wife was awarded $52.5 million for loss of her husband's services, comfort, society and attentions. Navarro's son, Scottie, was awarded $1.5 million for loss of his father's services, comfort, companionship and society.

Navarro was paralyzed after physician's assistant Mark Herranz, who attorneys said failed his state licensing test four times, and Dr. Michael Austin failed to realize he was experiencing a stroke when they treated him at Tampa's University Community Hospital-Carrollwood in 2000. Navarro was diagnosed with sinusitis and sent home.

According to his attorney, Jeffrey Goodis of Thompson Goodis Thompson Groseclose & Richardson in St. Petersburg, Austin does have medical malpractice insurance. He referred all other inquiries to the insurer, ProNational Insurance Co., in Birmingham, Ala. Company spokesman Frank O'Neil declined to comment.

Carrollwood Emergency Physicians and Franklin Favata & Hulls, Herranz's and Austin's employers, were also named defendants. Carrollwood Emergency Physicians and FF&H were represented by Brian Stokes of the Unger Law Group in Orlando. Herranz died less than a year ago and according to Navarro spokesman Paul Abercrombie, was also represented by Stokes.

As of late afternoon Tuesday, the Daily Business Review did not know whether Carrollwood Emergency Physicians, FF&H or Herranz had medical malpractice insurance coverage.

The verdict is the largest medical malpractice verdict in state history according to Navarro's attorney, Steve Yerrid of The Yerrid Firm in Tampa. Navarro was also represented by Richard Gilbert and David Dickey of the de la Parte and Gilbert Law Firm.

Dickey attributed the large verdict to multiple factors, including the age of Navarro's young child and the number of plaintiffs.

The case was filed in 2002 before caps were put in place by the Florida Legislature on noneconomic damages.

Late Monday night, Carrollwood Emergency Physicians and its affiliated group, Franklin Favata & Hulls, filed for Chapter 7 bankruptcy, interrupting the punitive damages portion of the case. The jury deliberations were temporarily halted while attorneys for Navarro argued the bankruptcy cases should be put on hold.

In its filing to the U.S. Bankruptcy Court of the Middle District of Florida, Carrollwood Emergency Physicians estimated its assets to be between $1 and $50,000, while it had over $100 million in debts.

In a response to the bankruptcy filing, plaintiffs attorneys alleged in bankruptcy court that the timing may have been intended to delay the punitive damages portion of the trial.

SYMPTOMS DESCRIBED

On Aug. 9, 2000, Navarro, who was a professional basketball player in his native Philippines, entered University Community Hospital-Carrollwood with a headache, nausea, dizziness, confusion and double vision. He described a personal medical history of hypertension, diabetes and elevated cholesterol plus a family history of strokes to the triage nurse. A different nurse than the triage nurse also noted he was unsteady on his feet.

When Navarro spoke with Herranz in the examination room, he mentioned the sudden onset of a headache earlier that day and that he had felt a "pop" in his head.

According to the 2005 second amended complaint, Herranz did not complete an adequate medical history of Narvarro, nor did he do a complete or adequate neurological exam.

Navarro spent about 5 1/2 hours at UCH-Carrollwood, during which time he had two CT scans of his brain and was diagnosed with "sinusitis/headache" by Austin, prescribed Vicodin for the pain and an antibiotic by the doctor and sent home. He was not told to watch for any stroke symptoms.

The suit alleged that Navarro presented classic stroke symptoms that Austin should have noticed. It further said that CT scans are not adequate diagnostic tools for ruling out the type of stroke Navarro had.

Early the next morning, Navarro woke with a severe headache, slurred speech, nausea, confusion and trouble walking. He was readmitted to the UCH-Carrollwood Emergency Room at 6:05 a.m. Upon his return, he was labeled "urgent," but doctors still had not diagnosed a stroke. It wasn't until he was transferred to Carrollwood's sister hospital, UCH-Fletcher, that afternoon that surgery was finally performed. By then, the stroke had already left him paralyzed with mental disabilities. During surgery, he slipped into a four-month coma. He is now confined to a wheelchair.

Goodis, Austin's attorney, said it was too soon to know what the defense's next move will be.

The Sept. 29 verdict held each Austin and Herranz 25 percent responsible and two physician groups -- Franklin Favata & Hulls and Carrollwood Emergency Physicians -- accountable for the remaining 50 percent.

Judge Halts Defendants' Bid to Avoid $116M Med-Mal Verdict

UST Audits coming this month (October)

Jonathan C. Becker, Attorney at Law

Lawrence, Kansas

Effective October 17 per BAPCPA §603 at least 1 of every 250 cases will be audited. Notification letters will be sent by the UST. Recipients will have 21 days to produce the 4 categories of required documents:

(1) 6-months of payment advices

(2) 6-12 months of bank statements

(3) divorce decree

(4) packet of documents such as 2-4 years of tax returns, titles to property, deeds, etc.

The audit will result in one of 3 outcomes:

audit complete, no discrepancy: UST will not interfere with discharge

audit complete, discrepancy: UST may move to deny discharge

audit incomplete: UST will move to deny discharge

Said Mr. Becker, "a lot of attorneys are going to get caught by this. It may also result in disgorgement motions"

In re Ellis, 339 B.R. 136 (Bkrtcy.E.D.Pa. 2006) DIANE WEISS SIGMUND, Chief Judge §§362(c)(3)(C)(i) and (ii) Debtor's motion to extend the automatic stay brought timely with 30 days of filing petition was denied on grounds of bad faith where debtor could not demonstrate change of circumstances from previous dismissed case. In re Virissimo, 332 B.R. 201 (Bkrtcy.Nev. 2006) LINDA B. RIEGLE, Bankruptcy Judge § 522(p) 11 U.S.C. § 522(p) is applicable even though Nevada does not allow the choice of federal exemptions. Because the debtors acquired their homes within the 1215 days before the filing they are limited to the $125,000 homestead set forth in that § notwithstanding the fact that the Nevada homestead is higher. In re Warneck, 336 B.R. 181 (Bankr. S.D.N.Y., 2006) CECELIA G. MORRIS, Bankruptcy Judge §362(c)(3)(C)(ii) The court found the second filing was in good faith as to all creditors where: - The Debtors' Second Filing was dismissed for failure to make payments pursuant to a proposed plan of reorganization that had not yet been confirmed, the provision in Section 362(c)(3)(C)(i)(II)(cc) - failure to "perform the terms of a plan confirmed by the court" - does not apply. - There is no evidence that the Debtors failed to file or amend their petition, or other documents in the Second Filing. There is also no record in the Second Filing of any motion to lift the automatic stay, and no evidence that the Debtors failed to provide court-ordered adequate protection to any party. - The Debtors have filed affidavits from their daughter, Amy Wade, and son-in-law, William Wade, stating that they are willing and able to fund the Debtors' plan in the amount necessary to complete a Chapter 13 plan. In re Ziolkowski 338 B.R. 543 (Bkrtcy.Conn. 2006) LORRAINE MURPHY WEIL, Bankruptcy Judge. § 362(c)(3) Debtor had a previous case that had been dismissed within a year of filing the seocnd case. The debtor's attorney filed a motion pursuant to § 362(c)(3)(B) prior to the expiration of the 30-day deadline in which hearing must be held. However, the attorney relied on the court clerk to calendar the actual hearing within the 30-day period. Clerk actually set the hearing at a date beyone the 30-day deadline. Court held error in relying on clerk was not sufficient grounds to order an extension of the stay. Motion was denied. "However, to say that the Clerk's Office should have scheduled the Motion for a hearing to be held prior to the Hearing Deadline is not dispositive here. The Debtors were the movants and it was their ultimate burden to insure that the Motion was timely scheduled. When the Notice of Hearing was not issued timely (i.e., within three days), it was incumbent on the Debtors' counsel to take action. A telephone call to the Clerk's Office probably would have produced the necessary corrective action."

attorneys say new law is not steering people to chapter 13-they expect resurgence in activity

By ALAN WECHSLER, Business writer September 30, 2006 Almost a year after the U.S. Bankruptcy Law changed, the number of filings so far this year is little more than a third of the number filed in the same period in 2005. Lawyers acknowledge that the rules -- -- have kept some people from filing. But they say the rules aren't doing what they were supposed to, and they expect the numbers to pick up again in future. For instance, some lawyers say they are filing more Chapter 7s than Chapter 13s, though the new rules were supposed to encourage more Chapter 13s.

Mark J. Hodges v. CIT Group, 06 A 683

Court: Northern District of Illinois

Division: Eastern

Judge: A. Benjamin Goldgar

BK Caption: In re Mark J. Hodges

BK No.: 05 B 62676 Adversary Opinion Issued: October 4, 2006

First Equity Card Corp. v. Kleit, 05 A 1982

Issued: September 28, 2006 Judge: A. Benjamin Goldgar

Court: Northern District of Illinois

Division: Eastern

Estate v. Marcet, 05 A 00488

Issued: September 26, 2006 Judge: John H. Squires Court: Northern District (Illinois)

anti-cramdown provision under BAPCPA §1325(a)

entire sum loanedt for purchase of car + extended service contract is s protected by anti-cramdown provision of the code -- not just amount used to purchase vehicle itself

"TILL" formula formula governs interest paid to secured creditor (prime rate+risk factor)

In re Murray, 346 B.R. 237 (Bkrtcy.M.D.Ga. 2006) Creditor loaned money to debtors to purchase motor vehicle and pay for extended service contract. At time of filing the vehicle was valued at $8,612; balance owed to creditor was $10,498. Debtor's chapter 13 plan proposed cram-down, arguing that because the debt included the price of a service contract it was not a PMSI used for the purchase of a vehicle. Court held the hanging paragraph protects all of a loan secured only on a motor vehicle even if a portion was used for a service contract. Court also held that a PMSI falling within § 1325(a)(*) is a secured claim under § 506 and entitled to interest using the Till formula, notwithstanding language providing that sectiion 506 does not apply to a PMSI falling within 1325(a)(*).

BAPCPA: Court may not enlarge time limitations to meet new requirements

Bankruptcy Court lacks discretion to enlarge the time limits under BAPCPA § 521(a)(1)(B)(iv)

In re Ott, 343 B.R. 264 (Bkrtcy.D.Colo. 2006) Debtor filed chapter 7 two days after effective date of BAPCPA. Debtor failed to file required "payment advices" (paystubs or other evidence of income) as required under BAPCPA per § 521(a)(1)(B)(iv) within 45 days of filing the petition as required under § 521(i). Debtor's counsel informed court he may have inadvertently failed to inform debtors that pay stubs had to be filed by a certain date. Case was dismissed automatically on the 46th day. Debtors moved for relief from judgment based on counsel's confusion over the filing requirements of BAPCPA. The court, observing that by passing BAPCPA Congress viewed debtors "as the moral equivalent of shoplifters" reluctantly held that the court had no discretion to retroactively extend the 45-day deadline. Citing Judge Keith Lundin's treatise on Chapter 13, the court observed that the dismissal is automatic and requires no order by the court. "BAPCPA is a complex and extensive statute that is, at times, unforgiving to debtors and to their counsel. Snares and traps are present throughout BAPCPA for unwary debtors. By the design of Congress, the Court is not in a position to extricate counsel and debtors from these perils."

BAPCPA cap on homestead exemption

combined cap on homestead exemption + 'safe harbor' cannot exceed state homestead exemption

In re Summers, 344 B.R. 108 (Bkrtcy.D.Ariz. 2006) Where debtors acquired home within 1,215 days before filing petition but part of the purchase price came from sale of a previous homestead acquired earlier than 1,215 days before filing, debtors argued that the "safe harbor" provision of §522(p)(2)(B) provided that the $125,000 cap does not apply any of the equity in their home. The court disagreed, saying the Code puts a cap of $125,000 in equity on the home purchased within 1,215 days before the filing, including the equity that came from the sale of a home purchased beyond that period, but the combined exemption could not exceed the $150,000 homestead exemption provided under Arizona law. In doing so the Court distinguished the contrary outcome in the case of In re Wayrynen because the Florida homestead exemption is unlimited.